Manufacturing pay freezes increase as concern mounts on demand
THE number of pay freezes in the manufacturing sector increased during the quarter to the end of August following growing uncertainty about the economic outlook and medium-term prospects for demand, according to a new study.
The latest survey on pay data from EEF, the manufacturers’ organisation and JAM Recruitment shows that one in seven companies had frozen pay. This compares to one in nine for the previous survey for the three months to the end of June.
In addition to the number of freezes, more companies were agreeing lower settlements with one third of agreements below 2% and four fifths below 3%. The average pay settlement for the period was 2.4%, a slight fall from the previous survey of 2.5%.
Commenting on the latest figures, Richard Halstead, EEF Midlands Region Director, said: “Considerable uncertainty stands in the way of any strong growth in pay in manufacturing, on top of other indicators suggesting demand is softening as Eurozone markets and domestic demand remains weak.
“Government needs a strong plan for growth to offset the ongoing drags on business confidence.”
John Morris, Chief Executive of JAM Recruitment, said: “Pockets of confidence still exist, particularly in sectors like aerospace and automotive, but they are less widespread across the sector than was the case earlier in the year.
“However, we’re witnessing an increasing disconnect between the way employers see the landscape and the way employees do.
“With skills shortages acute in many sectors, candidates are alive to the fact that their expertise is in demand. This could trip-up some businesses in the future if they’re not prepared to try and match these expectations with pay increases.”
The survey shows the vast majority of settlements (51) were agreed in the 2.01 to 3% range, with 23 in the 0.01 to 2% category. Just 18 were agreed in the 3.01 to 4% range, with just four above 4.01%. There were no pat reductions recorded during the period.
In total, the September 2012 Pay Bulletin contains information on 112 settlements covering 16,274 employees. EEF said the figures may be subject to revision to take into account settlements for the period which had yet to be received.
